Snapchat rejects $3bn Facebook buyout

The wall street journal citing sources close to the
negotiations, said the all-cash offer came as other investors were valuing the
loss making two-year-old company at over $4bn. At $3bn Snapchat would be the
most expensive acquisition Facebook has ever made.

The company is believed
to have over 5 million active daily users and, according to Pew research, has
been downloaded by 9% of US mobile users. The service allows people to send
messages and photos with an expiration date so that they are deleted from the
recipient’s mobile device shortly after they are received. In September
Snapchat said it was handling over 350m messages a day.

According to the Journal,
Evan Spiegel, Snapchat’s 23-year-old co-founder and chief executive, is waiting
until early next year before considering any offers in the hope that Snapchat’s
numbers will grow enough to justify an even larger valuation.

The company’s valuation
has been growing as fast as its user base. In June Snapchat raised $60m from
investors that valued the company at $800m. Facebook reportedly offered $1bn
for Snapchat earlier this year. Last month top tech blog All Things D reported
that the company was in negotiations with China’s Tencent over an investment
that would value the firm at over $3.6bn.

That newsfollowed an announcement last month from Pinterest,the social scrapbooking company, that
it had raised $225m in new funds at a price that valued the firm at $3.8bn.

Snapbook’s valuation, and those of its social media peers, will
likely have soared after Twitter’s initial public
offering this month, which has valued the loss making short message
system at over $23bn.

The spectacular growth in
the company’s valuation echoes that of Groupon, the online discount company
that rejected a $6bn offer from Google before filing for an IPO. In late 2011
when the company started trading it was valued at over $16bn but soon crashed
to as low as $3.7bn. It has since recovered and is now worth $6.8bn